Budget 2012: it's about time the wealthiest generation in history gave up its tax breaks

In 1965, Pete Townshend wrote "I hope I die before I get old". Nearly 50 years later, his band is still performing, and we're still talking about his generation. People who were teenagers in the '60s are about to turn 65 and, as this morning's newspapers show, they're as important as ever. Apparently, a minor stealth tax – the withdrawal of the larger personal allowance that people over sixty-five get – is not just a mistake, but the greatest political mistake since Joseph Chamberlain announced: "I know what will make the urban poor vote for us! A big tax on imported food!"

But what I haven't seen anyone ask, except for a few politicians who must remain anonymous, is why on earth should people over the age of 65 get a bigger personal allowance than the rest of us? They already pay lower taxes on their income; you don't pay National Insurance on a pension. And they already get plenty of benefits; Pete Townshend, for all his earnings, can claim the winter fuel allowance and a free bus pass. Not to mention that the state pension, unlike all other benefits, is now protected by a "triple lock", which means it will always rise by at least the rate of inflation, average earnings or 2.5 per cent; whichever is highest. Why do they need this extra tax break, which mostly only helps them if they're quite well off anyway?

The baby boomer generation is the most cosseted, untouchable, powerful generation in our history. Sorry, but this is not "pensioner hatred", as our otherwise excellent Fraser Nelson says this morning. It is fact. Whatever the individual circumstances of particular people, on average, those in their sixties are better off than they ever have been. Meanwhile, the young – my generation – are finding it harder than ever imagined. As the Conservative minister David Willetts wrote in his brilliant book, The Pinch:

The baby boomers have concentrated wealth in the hands of their own generation. It is far harder for the younger generation to get started on the housing ladder or save for the future in a decent company pension. This leaves them more dependent on their parents for longer. That in turn means new barriers to the spread of opportunity and ownership. Growing to adulthood and starting a family are slower and more difficult. And now young people find themselves by far the biggest victims of the recession – unable to find a job or a mortgage. We are rightly sensitive to the injustices and inequities of life chances within a generation but ignore the injustices between generations, perhaps because they are harder to measure.

This was backed up at the weekend in an utterly essential edition of the Financial Times. As they found, my generation is the first in recent history which cannot reasonably expect to be better off than our parents. Meanwhile, the biggest gains have come for those born between 1945 and 1954, who are significantly better off than previous generations. The baby boomers. Pete Townshend's generation. For the first time ever, people in their 20s now have lower incomes before housing costs than people in their 70s and 80s. That's not "exactly what you'd expect", as Ros Altmann, the director of Saga, said on Today this morning. Of course it's not. Young people have to accumulate pensions, pay for children and buy houses. People in their 70s and 80s meanwhile are running down their wealth. You wouldn't expect them to have much income at all.

The reasons for this growing imbalance are obvious. Older people own all the wealth, and asset prices have soared – they all bought houses before property prices began their incredible upwards spiral. They are young enough to benefit from rapidly rising life expectancy, without being young enough lose out from the inevitable catch-up of pensions. They are living on company pension schemes, or public sector pensions, which are now closed to new entrants because they're unaffordable. Their peak earning years – between the ages of 45 and 60 – were during Labour's incredible borrowing spree, meaning that they got the benefits of higher spending without picking up the bill. The reason why our welfare bill keeps rising has little to do with "dependency" – the fastest growing part of it is on pensions, which cost £137 billion per year.

If we had a budget surplus, this debate would not be so urgent. But we don't; we have the biggest peace-time deficit in our history. After three years of depression, it's still close to 8 per cent of GDP. Someone has to pay more. Others may disagree, but I don't see why it's unfair to ask the wealthiest generation in our history to lose their special tax allowances.